Amidst heavy appreciation of rupee in recent times, Reserve Bank of India is working on the regulatory guidelines for futures trading in currency even as of August end, 2007, total forex contracts outstanding in the banks' balance sheet amounted to $ 1100 billion (Rs 44 lakh crore), of which almost 84% were forwards and rest options.

According S Gopinath, deputy governor as regards interest rate derivatives, the inter-bank rupee swap market turnover, as reported on the CCIL platform, has averaged around $4 billion (Rs 16,000 crore) per day in notional terms.

Gopinath churned out these figures while speaking at the inaugural of India Derivative summit organised by Euromoney in the city on Wednesday.

We have received several suggestions on currency futures fom market participants. These will be studied and executed at an appropriate time, she said

On regulatory guidelines for future trading currency Gopinath said that no time frame has been fixed for its implementation.

On geographical distribution of foreign exchange market turnover she said the share of India at $34 billion per day increased from 0.4 in 2004 to 0.9% in 2007. The activity in the forex derivative markets can also be assessed from the positions outstanding in the books of the banking system.

Indian forex and derivative markets have also developed significantly over the years. As per the BIS global survey the percentage share of the rupee in total turnover covering all currencies increased from 0.3% in 2004 to 0.7% in 2007.

The derivatives market in India has been expanding rapidly and will continue to grow. While much of the activity is concentrated in foreign and a few private sector banks, increasingly public sector banks are also participating in this market as market makers and not just users.

Their participation is dependent on development of skills, adapting technology and developing sound risk management practices.